Jewellery Stocks Rally: US Trade Deal & Strong Q3 Fuel Gains

Introduction: A Sector-Wide Surge

Shares of Indian gems and jewellery companies experienced a significant rally, with some stocks gaining as much as 18% in a single trading session. The surge was driven by a combination of strong Q3 FY2026 earnings reports and positive market sentiment following the announcement of a US-India trade deal framework. This dual catalyst has renewed investor interest in a sector that faced headwinds from export tariffs and fluctuating gold prices.

Broad-Based Gains in Jewellery Stocks

The market witnessed heavy trading volumes for jewellery stocks, indicating strong investor participation. Goldiam International was a standout performer, rallying 18% to ₹429.35. The stock saw its average trading volumes jump threefold and has appreciated 43% in the past week alone. Kalyan Jewellers India also saw a substantial increase, soaring 12% to ₹424.85 on the back of a nearly fourfold rise in trading volumes.

Other companies in the sector also posted notable gains. Senco Gold surged 7% to ₹355.75, P N Gadgil Jewellers rose 6.5%, and Thangamayil Jewellery climbed 5.5%. Even larger players like Titan Company saw a 2% increase, trading at ₹4,227.80. This broad-based rally occurred while the benchmark BSE Sensex was up a modest 0.6%, highlighting the exceptional performance of the jewellery sector.

The US-India Trade Deal Framework

A key driver for this optimism is the interim trade framework agreed upon by India and the United States. The framework aims to boost bilateral trade towards a target of $100 billion over the next five years. A crucial component of this agreement for the jewellery sector is the potential reduction of tariffs on cut and polished diamonds (CPDs) back to zero. This move is subject to the successful conclusion of the interim agreement and could provide a major stimulus to Indian exporters.

Relief for a Pressured Export Market

The US is the largest export market for India's gems and jewellery industry, accounting for approximately 30% of total industry sales. However, the sector has been under pressure. Exports to the United States contracted sharply by 44.42% year-on-year to $1.86 billion during the April–December 2025 period, down from $1.95 billion in the same period the previous year. The decline in December 2025 was even steeper at 50.44%, reflecting the impact of tariffs and subdued consumer demand. According to ICICI Securities, the reduction of tariff rates to zero would bring significant relief to the industry, directly benefiting exporters like Renaissance Global and Goldiam International.

Stellar Q3 Financial Performance

Adding to the positive sentiment were the strong financial results for the quarter ended December 2025. Despite the challenging export environment, several companies reported robust growth, signaling resilient domestic demand.

Goldiam International: The company, which supplies diamond jewellery to retailers in the USA, reported an 18% year-on-year growth in consolidated revenue to ₹339.7 crore. Its profit after tax (PAT) jumped 37.4% to ₹68.4 crore. The EBITDA margin expanded by 211 basis points to 26.7%, driven by a higher contribution from lab-grown diamond jewellery, which constituted 90.5% of its export sales mix. As of December 31, 2025, Goldiam held an order book of ₹180 crore.

Kalyan Jewellers: The company posted an impressive 90% year-on-year growth in consolidated PAT, reaching ₹416.30 crore. Revenue for the quarter jumped 42% to ₹10,343 crore. The management attributed the 135-basis-point improvement in its EBITDA margin to a better product mix, procurement efficiencies, and operating leverage.

Market Analysis and Outlook

The simultaneous positive news on both international trade and domestic earnings has created a powerful narrative for the Indian jewellery sector. The strong Q3 results demonstrate the sector's ability to navigate high gold prices and drive growth through festive demand and strategic initiatives. The potential US trade deal offers a clear path to reviving export growth, which has been a significant drag on performance.

Investors are pricing in the future benefits of the trade deal while gaining confidence from the current financial strength displayed by these companies. The combination of these factors suggests a favorable outlook for the sector, contingent on the finalization and implementation of the proposed tariff reductions.

Conclusion

The rally in gems and jewellery stocks is backed by fundamental strength and a significant potential policy catalyst. Strong domestic consumption, evidenced by stellar Q3 earnings, provides a solid foundation, while the prospect of a zero-tariff regime with the US opens up a substantial growth opportunity for exporters. The market will now be closely watching for further announcements regarding the finalization of the US-India interim trade agreement, which could sustain the sector's positive momentum.